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What has Obama Changed?

Jun 10, 2009
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http://www.europac.net/externalframeset.asp?from=home&id=17830&type=schiff

Unlike everybody else on these forums I always provide a link.

Although Barack Obama has refrained, at least for now, from delivering triumphant speeches in a naval flight suit, there is nevertheless a strong tone of accomplishment emanating from the President and his deputies. Over the weekend, top White House economic adviser Lawrence Summers even pronounced that the recession is now over. Without hedging his bets, Summers declared that thanks to the Obama Administration's wise stewardship, economic stimuli, and emergency bailouts, another Great Depression, set up by the prior Administration, had been narrowly averted. Summers saw no impediments to the return of sustainable growth. He may as well have delivered these remarks from the deck of an aircraft carrier.

I hate to shoot down these high-flying expectations, but the economy is not improving. All that has changed is that we are now more indebted to foreign creditors, with even less to show for it. Washington's current policies have once again deferred the fundamental, market-driven reforms needed to redirect us onto a sustainable path. Instead, through aggressive monetary and fiscal stimuli, we are trying to re-inflate a balloon that is full of holes. This was the Bush Administration's exact response to the 2002 recession. It's shocking how few observers note the repeating pattern, especially the fact that each crash is worse than the last.

Obama's claim of success largely derives from the slowing tally of job losses, the seemingly renewed strength in the financial system, the pickup in home sales and home prices, and the positive GDP figures. But these 'achievements' fall apart under close examination.

First, a closer look at the jobs numbers shows that employment improved in sectors that benefited most directly from monetary or fiscal stimulus: government, healthcare, financial services, education and retail sales. Meanwhile, sectors such as manufacturing continued to shed jobs at an alarming rate. These dynamics actually exacerbate our economic imbalances. Recent trade deficit figures (in which the deficit-reduction trend of early 2009 has sharply reversed) show how this employment growth is preventing needed rebalancing. Essentially, the Administration is nurturing firms that cannot survive without subsidies and support.

Once stimulus is removed, the “saved” jobs will be among the first to go. If the President has not figured this out yet, I am sure Fed Chairman Bernanke has. As a result, the market should discount as pure bluff any claims from the Fed about an eventual “exit strategy” from current stimuli. Such an “exit” would bring about Bernanke's greatest fear – spiking unemployment.

Second, major investment and commercial banks are not back on their feet, but remain fundamentally insolvent. Their current business model of risk-free speculation depends upon the maintenance of government backstops, the continued availability of cheap money from the Fed, and the use of accounting gimmicks that allow them to conceal losses behind phony assumptions.

Third, while it is true that home prices have stopped falling, this represents failure, not victory. True success would be a drop in home prices to a level that homebuyers could actually afford. Instead, we have maintained artificially high prices with tax credits, subsidized mortgage rates, low down payments, and foreclosure relief. With 96% of new mortgages now insured by federal agencies, market forces have been completely removed from the housing equation. With so many government programs specifically designed to maintain artificially high home prices, devastating long-term consequences for our economy are inevitable.

Finally, it is true that the GDP yardstick shows an economy returning to growth. However, as I have often repeated, this measure has deep flaws that render it almost useless for judging the soundness of an economy. Currently, the figures are merely reporting increasing indebtedness as growth. Using GDP as the main financial indicator is equivalent to judging a man's success by the cost of his house, car, and wris****ch. Rather than gauging income, these figures merely indicate a level of spending and have nothing to do with earning power.

Paul Volcker, the only independent voice in the Administration, has not been deceived by his colleagues' sunny claims. He recently noted that our economy still evidences “too much consumption, too much spending relative to our capacity to invest and export” and that the problem is “involved with the financial crisis but in a way [is] more difficult than the financial crisis because it reflects the basic structure of the economy.” Yet, President Obama has chosen not to address these concerns.

As Summers and Obama like to point out, the vast majority of economists take it on faith that, with the right finesse, the stimulus can be withdrawn without pushing the economy back into recession. But based on the distortive effects of stimuli and bailouts, our economy has adapted to a climate where cheap credit is not only plentiful but critical.

Eventually, the cheap credit will dry up. Not because the Fed decides it should, but because our foreign creditors stop lending. When that happens, this Administration will look as clueless about economics as the last one was about the pitfalls of nation-building.

But for now, the chattering classes believe strong government action has delivered us from calamity. For them, at least, it's “mission accomplished!”
 
Jul 24, 2009
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Why not summarise it for us?

Some of us don't want to read the whole thing, kinda boring reading about some guy, with a vested interest, rambling on and on.

What is your point? Do you agree with this writer? Do you not?
 
Jun 10, 2009
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The "Radical Ron Paul" Said this in 03.
"Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans."
 
A

Anonymous

Guest
"Unlike everybody else on these forums I always provide a link"

Tons of folks provide links to back up their nutty ideas you douchbag...but you are just so special...you are a ****tard...
 
A

Anonymous

Guest
I am just waiting for the ron paul train to come over and lick my balls...let's make it happen...genius ideas for a political reality...
 
A

Anonymous

Guest
"The day a spaceship comes down from Jupiter, licks my anus, pays my taxes, and makes those dogs over there **** those cats...well, that is the day I will believe in any form of government. Just as an aside, could we bring back Hee-Haw as it was the greatest show ever and by the way, I like to watch racoons **** mice." Ron Paul, 1999:eek:
 
Jun 10, 2009
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and...............you still haven't answered the question??????? What has Obama Changed????????????????????????????


I will be waiting for a long time I am certian.
 
RightWingNutJob said:
Still waiting for a response on how we have changed.

Hmm, not sure how much you have changed or what you see Obama changing, but from the outside, i.e. other countries, he sure has improved perceptions of America and American foreign policy.

Were you expecting some sort of massive change to take effect in 6 months or something?
 
Jun 10, 2009
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Ripper said:
Hmm, not sure how much you have changed or what you see Obama changing, but from the outside, i.e. other countries, he sure has improved perceptions of America and American foreign policy.

Were you expecting some sort of massive change to take effect in 6 months or something?
Can you explain what the change has been?
 
This thread has gotten enough response that I will leave it open. At some point it may be merged with the other Obama thread.

On topic, I agree that the public perception of Obama in Europe is much better than that of GWBush. On the other hand, that isn't necessarily saying much, as GWBush was, shall we say, not well-liked.

Susan
 
He wasn't well liked on this side of the pond either, regardless of what someone like RWNJ will try to sell you.

Surprised he brings up Austrian economics, when Bush adhered to a much more neoconservative form of supply-side economics while wrecking the economy.
 
Apr 12, 2009
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Don't know about Countries outside of Europe (but i can imagine there is the same feeling).

With bush, America stood for war, inequality, injustice, imperialism, unlimited capitalism ...
Now, America is hope, it is something new, people still believe Obama can create peace in some countries, do something about the inequality, etc.


(This is only the general feeling (in the press), especially in Belgium, ofcourse there are other opinions too)
 
Jun 10, 2009
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Buffalo Soldier said:
Don't know about Countries outside of Europe (but i can imagine there is the same feeling).

With bush, America stood for war, inequality, injustice, imperialism, unlimited capitalism ...
Now, America is hope, it is something new, people still believe Obama can create peace in some countries, do something about the inequality, etc.


(This is only the general feeling (in the press), especially in Belgium, ofcourse there are other opinions too)
Can you explain the inequality that you speak of?
 
Apr 12, 2009
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RightWingNutJob said:
Can you explain the inequality that you speak of?
The delusion of the American dream that justifies the lack of social security, social healthcare, possibility of social mobility.

But i am talking about the way it is seen from my point of view, don't say this is the actual situation.

Edit: to illustrate: GINI Belgium: 0.25, GINI US: 0.40